Young couples take “investment for child’s needs” seriously usually after the birth of their child. They don’t realize that this causes problems for them later on in the name of inadequate funds or money shortage. Many Indian savers save keeping top 3 goals in mind; Education of their children, Weddings of their children and their own retirement.
What goes wrong is that young parents are unable to save huge amounts on a persistent basis. Expenditures are rising but income stays the same. They need to pay EMI for house and car, spend on things that will elevate them in their social circle such as dining out, going for a vacation, and so on. Despite so much expenditure, income stubbornly remains constant.
Though a Systematic Investment Plan seems a great idea, there is anguish that it might not be sufficient. There are varied problems that make a property purchase a fair recourse. Purchasing a second home either for relaxation and vacation or for rent, irrespective of location provides them contentment of some kind at least. They anticipate that a home will give them much more money than their current income and would be able to cover future costs.
Of course, young parents are aware of financial instruments, equities, mutual funds etc. However not many people like taking risks.
It is never too late to start saving for a child’s education. It’s always advisable to start at the earliest. You can build some education savings into your budget. When the little one enters the world, you would already have some assets kept ready for his/her college. Continue investing and you can easily pay the juniors college fess by the time he/she comes of age to attend college. Rather than purchasing too many toys and outfits, one could use some of that money for the kid’s college savings.
The future is uncertain but that doesn’t mean we indulge completely in the present and neglect the future. Who will pay our bills in the future if we are left with no funds(debt funds) and no one to help? But again, that doesn’t mean we live like misers today. The cycle goes on and on.
You have to strike a balance between the two. Live today but ensure for the future too.
- Determine your cash flow.
- Be clear on what you want, so that you eliminate unnecessary expenditure
- Limit your monthly bills and don’t be extravagant
- Set up separate funds(mutual funds) and invest in them regularly, like Retirement Fund, Child Education Fund and Emergency Fund and so on.
- Keep aside some money for spontaneous expenditure, in other words, to use that money only for recreational expenditure.
Time is your ally when you begin early. This is even truer in case of your children. Since there is lots of time, you can invest some amounts regularly.
Easier said than done, but if you don’t try now, who will try it and when?